Stocks and ETFs fell hard yesterday as the Greek bailout looks more and more precarious and global growth slows.
We had a decent day as our inverse ETF and volatility positions gained and offset declines in our metals positions.
In our ETF Master Portfolio we experienced unrealized gains/losses of +7.6%, -1.92% and +1.6% while our Option Master Portfolio had one day unrealized gains/losses of +33.1% and -19.9%.
The Dow Jones Industrial Average (NYSEARCA:DIA) shed 203 points, 1.6%, while the S&P 500 dropped 1.5%, the Nasdaq 100 declined 1% and the Russell 2000 dumped 2.1%.
As bad as the news was at home, the news in Europe was worse with the Stoxx 50 swooning 3.4%, the FTSE 100 dropping 1.9% and the DAX taking the biggest hit at -3.4%.
The prevailing fear today was the threat of a disorderly Greek default starting Thursday if enough bond holders don’t agree tot he bond swap and write downs scheduled to reduce Greece’s monster debt overhang. The next round of bailout money is contingent on that agreement flying and as of today only 20% of the required 75% of bond holders had signed on to the deal.
U.S. stock indexes took the news poorly as the Dow Jones Industrial Average took its worst drop in percentage terms since December and its first 200 point one day drop since November.
Of course, we have been anticipating this sell off has been anticipated and now the questions are, “Will it continue?” and if it does, “how bad will it get?”
No one knows, for sure, of course, however, strong support for the S&P 500 (NYSEARCA:SPY) lies at 1320, 1300 and the 200 day moving average at 1258, the last level being some 6-7% below current levels.
It all really depends upon Greece and the slowing global economy. While economic reports have been largely positive at home, recent news has indicated weakening here but not to the magnitude being measured in Europe and even China.
Bottom line: Global growth is slowing, headline news from Europe is fraught with danger and technical indicators point to the potential for further declines ahead.
John Nyaradi is the author of The ETF Investing Premium Newsletter.
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